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COMPANY NEWS; Hutton-Shearson Deal Announced

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After clearing away last-minute problems on financial terms, Shearson Lehman Brothers Holdings Inc. and the E. F. Hutton Group Inc. announced yesterday, as expected, that Shearson had agreed to buy Hutton for about $962 million.

Under the terms, improved four times since last Monday, Shearson will begin a $29.25-a-share cash tender offer ''within a few days'' for 28.1 million of Hutton's 32.9 million shares. The remaining stockholders will receive 10-year, 10 3/4 percent subordinated debentures valued at $29.25.

The Shearson-Hutton deal would create a company with $3.7 billion in capital, $102 billion in assets under management and 2.9 million active customers. Based on total capital, the combined firm would rank second in the industry behind Merrill Lynch & Company. 'More Business and More Money'

The combined investment firm is expected to lay off about 6,000 employees, mostly among the clerical staff, insiders said. But the jobs of the 12,000 sales people appear to be secure. Indeed, Shearson and Hutton will invite all of them to seven or eight major cities around the country in the next two weeks to explain a new compensation package.

Commissions will be cut for Hutton's sales people. But, ''with the depth of product and service, they're going to do more business and make more money than with Hutton,'' said Shearson's chairman, Peter A. Cohen.

Hutton's payout system was considered one of the highest in the industry and, insiders said, was scheduled to be cut before bad publicity over a check-kiting scandal two years ago made such changes inadvisable.

Shearson's code words for the deal was ''Project Baseball,'' in honor of Hutton's leading director and negotiator, Peter V. Ueberroth, the Commissioner of Baseball.

In a tribute to Mr. Ueberroth, Mr. Cohen said, ''He was the guy running the show. He did a wonderful job.''

About a year ago, after Robert Fomon stepped down as Hutton chairman in the wake of bad publicity, Hutton directors invited Mr. Ueberroth to become chairman, but not chief executive. The board repeated the offer several times since then - including as recently as two week ago - but the baseball commissioner turned down the proposal. Survivors at Hutton

Among the important survivors in Hutton's hierarchy will be Dina Merrill, the actress, who is a Hutton director and the daughter of Edward F. Hutton, the founder. She will become the first woman to join the 18-member Shearson board.

Other survivors expected to become part of Shearson's executive slate include Robert P. Rittereiser, president and chief executive of Hutton, and Jerome H. Miller, executive vice president in charge of Hutton's 12,000-member sales force.

No decision has yet been made about keeping the Hutton name, but Mr. Cohen said in an interview, ''There's a lot of sentiment at Shearson for making the name Shearson Lehman Hutton.''

But Mr. Cohen is understood to be putting off a decision on the Hutton name until he sees market research on it. The cost of a new name could run as much as $5 million. Details of the Deal

As part of the deal, Shearson would collect $33 million in cash - as a consolation fee - if someone else outbids it. As advisers to Hutton, Salomon Brothers will collect $3 million and the Blackstone Group, headed by Peter G. Peterson, the former head of Lehman Brothers, will collect $1.5 million.

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Although investment bankers for Hutton had originally attempted to set up an auction sale for the highly coveted Wall Street firm, every suitor wanted exclusive treatment.

Shearson was the only firm to actually present what could be called a firm bid. But people close to the sale said that Dean Witter gave Hutton a strong indication that it was prepared to pay almost as much as Hutton.

Mr. Cohen said the the bidding process began on Monday, Nov. 23, when Mr. Rittereiser phoned to ask if Shearson was ''still interested'' in Hutton. A year ago, Shearson had offered Hutton $50 a share, or $1.6 billion, but Hutton demanded $55.

Mr. Cohen said yes. And by Wednesday members of the two top managments got together, many for the first time. Shearson people, meanwhile, worked through Thanksgiving on the deal.

On Sunday, Nov. 29, Mr. Cohen related, at least 50 Shearson people gathered to review what they had put together on Hutton since the first phone call on the previous Monday.

Neither would comment on the nature of either proposal, although other parties in the deal said that the two proposals were fairly close, but nowhere near the final price.

Shearson is understood to have made a third proposal - $25 in cash plus $8 in preferred stock. But the preferred stock was valued by traders at only $4.

As related by Mr. Cohen, Mr. Kimmell of Salomon and Peter G. Peterson, head of Blackstone, called him on Tuesday - after Hutton had received the written proposal - and wanted to negotiate.

''We did,'' Mr. Cohen said, apparently referring to the third bid of $25 in cash plus $8 in stock. Hutton was initially overjoyed and broke out champagne.

But by Tuesday night, Hutton, unhappy over Wall Street's assessment of the preferred stock, insisted on changes. Insiders said lawyers for both sides then began dickering over a new financial package, working all Tuesday night and all day Wednesday to reach the final financial terms.

A version of this article appears in print on December 4, 1987, on Page D00004 of the National edition with the headline: COMPANY NEWS; Hutton-Shearson Deal Announced. Order Reprints|Today's Paper|Subscribe